The promulgation of the UAE Corporate Tax regime has introduced a paradigm shift in corporate governance, specifically regarding Transfer Pricing (TP) regulations. For Multinational Corporations (MNCs) and holding companies operating within the Emirates, the pricing of inter-company transactions is no longer merely an accounting decision—it is a matter of strict statutory compliance.

The promulgation of the UAE Corporate Tax regime has introduced a paradigm shift in corporate governance, specifically regarding Transfer Pricing (TP) regulations. For Multinational Corporations (MNCs) and holding companies operating within the Emirates, the pricing of inter-company transactions is no longer merely an accounting decision—it is a matter of strict statutory compliance.

For entities maintaining cross-border relationships with a foreign parent company, or engaging in transactions with related parties, the legal landscape is defined by two critical pillars:
• The Arm’s Length Principle: Pursuant to the prevailing legislation, any transaction involving the transfer of goods, services, or intangibles between related parties must be priced as if the transaction were conducted between independent, unrelated entities. Deviating from market value to shift profits is now a direct violation of the law.

• Mandatory Documentation: The burden of proof lies with the taxpayer. Qualifying entities are legally obligated to prepare and maintain a comprehensive Master File and Local File. These documents must substantiate the pricing methodologies used and demonstrate full alignment with OECD guidelines and UAE tax laws.

? Legal Perspective & Risk Assessment: The risk of non-compliance extends beyond simple administrative errors. The Federal Tax Authority (FTA) possesses the statutory authority to audit, challenge, and re-characterize transactions. If the FTA determines that inter-company pricing was manipulated to reduce the tax base, the consequences include profit adjustments, the imposition of retrospective tax liabilities, and severe administrative penalties.

Proactive legal review of all inter-company agreements is now a compliance imperative.
Do not leave your fiscal position open to scrutiny. Our team specializes in structuring and reviewing inter-company transactions to ensure they withstand regulatory audits.